A friendly merger with GKN Westland and a joint venture with Bell are an alternative to a "savage rationalization" of the helicopter industry that would cut jobs, close factories and eliminate some capabilities, according to Agusta president and CEO Amedeo Caporaletti.

Both deals help Agusta to offer a complete range of products, Caporaletti said in an interview with Show News. Although significant details of the merger remain to be hammered out in negotiations over the rest of the year, the result will be a helicopter manufacturer that compares in size with Eurocopter and Bell, with about $2 billion in annual sales. "We're sitting around a table, finding synergies, and realizing that we're dealing with people, not just factories," Caporaletti said.

Westland and Agusta have compatible products, he noted. The Westland Lynx is similar in size to Agusta's A129, but has different missions, and the two companies jointly own the EH101. The merged companies will share "programs, production, sites and strategy" and will probably outsource more manufacturing while retaining critical technologies in-house, Caporaletti expects. "We'll strengthen our management to manage outside sources," he said.

Parents GKN and Finmeccanica are still evaluating the assets of the two helicopter companies, Caporaletti said. Westland has a greater sales volume, but Agusta's sales are more diversified and less dependent on a few large programs. "I don't know who will be the majority shareholder," he said. "The starting point was 50:50."

Caporaletti said he is "very confident" about the new joint venture with Bell. Europe "will make a significant contribution to the order portfolio for the BA609," he predicted, "including government entities and private customers."

Agusta surprised the world by unveiling the AB139, which is the way Caporaletti likes it. "We don't like to bring information out until we're well advanced," he said, adding that 40 percent of the design work on the new helicopter has been completed. Absent the JV with Bell, the AB139 would not have been unveiled until 2001, and would have been as much of a surprise as the A109 Power and the Koala.

With steadily increasing profits since 1994, Agusta continues to plow its earnings back into capable, conventional new products.

Agusta expects that AB139 sales will start slowly in 2002-04, and pick up to "40 or 50 a year" through 2015, Caporaletti said. The market is 40 percent military and 60 percent commercial, much of it to replace an aging world helicopter fleet.

"All the medium helicopters on the market are old," he said.

The AB139 will meet FAR/JAR Part 29 rules and have a crashworthy structure and modern avionics. It will offer a cabin, Caporaletti said, that is "large, clear, unobstructed--and underline that."

By Bill Sweetman